Nikkei index tops 21,000 for first time in nearly 21 years

Strong results reported by retailers drives more gains

MASAYUKI YUDA, Nikkei staff writer

TOKYO -- The Nikkei index is on a roll, marking a gain for the ninth consecutive day to top the 21,000 level for the first time in almost 21 years. Driving the rally were the strong results of retailers, reported Thursday after trading hours.

The 225-issue Nikkei Stock Average rose 200.46 points, or 0.96%, to 21,155.18 -- its highest mark since Nov. 27 1996. The index has been surging nine days in a row, with its last such streak in December 2016.

Retailers were the stars of the day. Uniqlo operator Fast Retailing rose 5.5%. The world's third largest apparel company reported record high revenue and net profit for fiscal 2017 through August, thanks to its strong Asian business.

Asahi Group Holdings was also a winner, with the Japanese brewery announcing Thursday its intent to sell nearly a 20% stake in Chinese Tsingtao Brewery. Asahi plans to move some of its assets from China to Europe, where they see better growth potential. The plan seems to please investors, as Asahi's stock gained more than 1.8% Friday.

But results were not the only drivers. Investor sentiment -- both local and foreign -- has been perking up as nothing seems to be threatening the market.

Despite obvious tensions, North Korea has yet to launch another missile or conduct another nuclear test. The U.S. Federal Reserve has started normalizing its balance sheet, but it will be a slow, gradual process. The relatively calm global stage has pushed investors to go equity bull in other places as well, especially Asia. The benchmark indexes of South Korea, Taiwan, Indonesia and the Philippines are all now in record high zones.

The unruffled market helped the dollar to yen stabilize. The greenback, which traded in the lower 107 yen range in early September, is now hovering around 112. When the yen appreciated, investors worried about poor earnings of Japanese export companies. But these fears have been allayed.

Still, some dark clouds may be gathering. "Cross asset volatility is very low, as valuation gets dearer," said Alain Bokobza, Societe Generale's Head of Global Asset Allocation. "It could mean that investors are being complacent to upcoming risks. We would reduce risk assets."

This unwinding, if it actually kicks in, could throw cold water on the global rally.